ICL Sales & Services (P) Ltd., New Delhi V. ITO, New Delhi

ITA 800/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97065 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-07-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 17-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: G N GUPTA I T P
• Keywords: Reopening of assessment; Accommodation entries; Reason to believe
• Section: 143(3); 234B; 147; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SHRI H. S. SIDHU, JUDICIAL MEMBER ITA NO.800/DEL/2012 (ASSESSMENT YEAR: 2003-04) ICL SALES & SERVICES (P) LTD, 193, SHAHPUR JAT, NEW DELHI PAN:AAACI2920G VS ITO, WARD-11(3), C.R.BUILDING, NEW DELHI APPELLANT RESPONDENT APPELLANT BY : SHRI G. N. GUPTA, ITP RESPONDENT BY : SHRI T. VASANTHAN, SR. DR DATE OF HEARING 29.07.2015 DATE OF PRONOUNCEMENT 14.08.2015 O R D E R PER H. S. SIDHU, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF LD. CIT(A) XV, NEW DELHI DATED 04.01.2012 FOR THE ASSESSMENT Y EAR 2003-04, ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD CI T(A), XV, NEW DELHI VIDE HIS ORDER DATED 04.01.2012 HAS ERRED IN LAW AND IN HOLDING THAT NOTICE U/S 148 ISSUED BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WA S VALID. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD CIT(APPEALS), XV, NEW DELHI HAS ERRED IN CONFIRMING ADDITION OF RS.20,03,000/- MADE BY ASSESSING OFFICE U/S 143(3) OF THE INCOME TAX ACT, 1961. 3. THAT THE LD CIT(A) HAS ERRED IN NOT DISPOSING OF F GROUND NO.4 REGARDING CHARGING OF INTEREST U/S 234B OF THE INCO ME TAX ACT, 1961. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 02.12.2003 DECLARING A LOSS OF RS.1,11,85 0/- AND THE A.O. PROCESSED THE SAME U/S 143(1) OF THE I. T. ACT, 1961. THE CA SE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ON THE BASIS OF INFORMATION RECEIVED F ROM DIT (INVESTIGATION) THAT PAGE 2 OF 8 I.T.A.NO. 800/DEL/2012 THE ASSESSEE COMPANY HAS RECEIVED ACCOMMODATION ENTRIES FROM POLO LEASING & FINANCE PVT. LTD. AMOUNTING TO RS.20,03,000/- ON 10.01.2003. ACCORDINGLY, NOTICE DATED 17.03.2010 U/S 148 OF THE ACT WAS ISSU ED BY THE A.O. AFTER RECORDING REASONS THEREOF AND COMMUNICATING THE SAM E TO THE ASSESSEE. THE ASSESSEE FIELD LETTER DATED 10.04.2010 AND RAISED O BJECTION IN RESPECT OF ISSUANCE OF NOTICE U/S 148 OF THE ACT AND THE SAME WAS DISPO SED OF VIDE LETTER DATED 10.08.2010 BY THE A.O. AFTER REJECTION THE OBJECTIO N RAISED BY THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 10.04.2010 SUBMITTED THA T THE RETURN OF INCOME U/S 139(1) WAS FILED ON 02.12.2003 AND THE SAME MAY BE TREATED AS HAVING BEEN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE I. T . ACT, 1961. 3. PROCEEDINGS ON BEHALF OF THE ASSESSEE HAVE BEEN ATTENDED BY SHRI SRUN KAUSAL, AR OF THE ASSESSEE. THE ASSESSING OFFICER D ISPOSED OFF THE OBJECTION BY HOLDING THAT THE ASSESSEE FILED DETAILS VIDE LETTER DATED 20.11.2010 STATING THEREIN THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT TO SELL PROPERTY LOCATED AT 8-AIRA APARTMENT, KUSUMPI, SIMLA VIDE AGREEMENT DATED 10.0 1.2003 WITH POLO LEASING AND FINANCE LTD, E-24, TAGORE MARKET, KIRTI NAGAR, NEW DELHI FOR RS.60 LAKH AFTER RECEIVING EARNEST MONEY OF RS.20 L AKH VIDE PAY ORDER DATED 10.01.2003 ISSUED FROM THE ACCOUNT OF POLO LEASING & FINANCING PVT. LTD WITH RATNAKAR BANK LTD, KAROL BAGH, NEW DELHI. THEREFOR E THE AMOUNT RECEIVED BY THE ASSESSEE COMPANY IS A CASH CREDIT BUT ON ACCOUN T OF ADVANCE TOWARDS SALE OF PROPERTY LOCATED AT SIMLA WHICH APPEARS IN THE BALA NCE SHEET UNDER THE HEAD CURRENT LIABILITIES AS ADVANCE AGAINST THE SALE O F PROPERTY. THE AO HAS HOWEVER HELD THAT THE ASSESSEE HAS CHANNELIZED ITS OWN MONEY IN THE SHAPE OF MONEY RECEIVED AGAINST THE PROPERTY WITH THE HELP O F THE POLO LEASING AND FINANCING PVT. LTD AS MENTIONED ABOVE AND TO GIVE C OLOUR ACCOMMODATION ENTRIES IN THE NAME OF THIS PARTY WAS NEVER BEYOND THE CONTROL OF THE ASSESSEE AS DISCUSSED ABOVE AND HENCE ADDITION OF RS.18,91,150/ -. 4. THE A.O. COMPLETED ASSESSMENTS U/S 143(3) / 147 OF THE I. T. ACT, 1961 VIDE ORDER DATED 30.12.2010. THE ASSESSEE CHALLENG ED THE ORDER OF A.O. BEFORE PAGE 3 OF 8 I.T.A.NO. 800/DEL/2012 LD. CIT(A) WHO VIDE ORDER DATED 04.01.2012 DISMISSE D THE APPEAL FILED BY ASSESSEE BY UPHOLDING THE ORDER PASSED BY A.O. AGGR IEVED BY THE IMPUGNED ORDER DATED 04.01.2012, THE ASSESSEE FILED APPEAL B EFORE ITAT. 5. THE LD. COUNSEL FOR THE ASSESSEE CHALLENGED THE IMPUGNED ORDER BY CONTENDING INTER ALIA THAT THE INFORMATION RECEIVED BY THE AO FROM THE DIT(I) WAS INCORRECT, THE IMPUGNED ORDER HAS BEEN PASSED B Y THE AO WITHOUT APPLYING HIS MIND, THE AMOUNT OF RS.20 LAKH WAS TAKEN AS ADV ANCE BY THE ASSESSEE AND THAT THE AO HAD NO REASON TO BELIEVE THAT THE INCOM E HAS ESCAPED ASSESSMENT. 6. ON THE OTHER HAND THE LD. DR REPLIED THE CONTENT ION MADE BY THE LD AR BY CONTENDING INTER ALIA THAT OBJECTIONS RAISED BY THE APPELLANT WERE DULY REPLIED WITH BY THE AO; THAT M/S. POLO LEASING & FINANCE PV T. LIMITED HAS ISSUED PAY ORDER NO. 110176001 DATED 10.01.2003 FAVOURING ASSE SSEE AND RELIED UPON THE ORDER PASSED BY THE AO AS WELL AS THE LD CIT(A) AND REQUESTED TO AFFIRM THE SAME. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS, PARTICULARLY THE IMPUGNED ORDER PASSED BY THE FIRST APPELLATE AUTHOR ITY ALONG WITH DOCUMENTS FILED BY THE ASSESSEE AS WELL AS CASE LAWS CITED BY BOTH THE PARTIES. 8. AS REGARDS THE ISSUE INVOLVED IN GROUND NO.1 WHI CH IS REGARDING VALIDITY OF NOTICE U/S 148 OF THE I. T. ACT, 1961, ISSUED BY A.O., LD. A.R. SUBMITTED THAT THE NOTICE WAS ISSUED ON THE BASIS OF COMMUNICATION RECEIVED FROM DIT (INV.) WITHOUT APPLICATION OF MIND BY THE A.O. AS REQUIRED BY LAW. HE FURTHER SUBMITTED THAT THE ACTION FOR REASSESSMENT U/S 148 CAN ONLY BE TAKEN BY THE A.O. HAVING JURISDICTION OVER THE ASSESSEE AND NOT BY AN YONE ELSE WITH THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, MUST BE FRAMED BY THE CONCERNED OFFICER ALONE AND NOT BY ANYONE ELSE. ON SATISFACT ION OF A.O. AND FORMATION OF BELIEF BY HIM MUST BE BONA FIDE AND AFTER PROPER AN D OBJECTIVE APPLICATION OF MIND BY HIM TO THE FACTS AND CIRCUMSTANCES OF THE C ASE AND MATERIAL ON RECORD. IF THE A.O. DOES NOT APPLY HIS MIND IN FORMING BELI EF IN OBJECTIVE MANNER, THEN PAGE 4 OF 8 I.T.A.NO. 800/DEL/2012 THE ACTION IN ISSUANCE OF NOTICE MECHANICALLY, IS V OID AB INITIO. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HA S RAISED OBJECTIONS BEFORE THE A.O. BUT THE SAME HAVE WRONGLY BEEN REJECTED IN A R OUTINE MANNER WHICH IS CONTRARY TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SFIL STOCK BROKING LTD., 325 ITR 285. HE REQUES TED THAT THE NOTICE U/S 148 OF THE ACT MAY BE HELD TO BE WITHOUT JURISDICTION, ILLEGAL AND VOID AB-INITIO AND MAY BE QUASHED. 9. LD. D.R. STRONGLY OPPOSED THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE AND STATED THAT HE A.O. HAS DECIDED TH E OBJECTIONS RAISED Y THE ASSESSEE BY PASSING SPEAKING AND ELABORATE ORDER UN DER THE LAW AND AFTER GIVING APPROPRIATE OPPORTUNITY TO THE ASSESSEE. HE FURTHER STATED THAT THE A.O. HAS ISSUED NOTICE U/S 148 OF THE CT ON THE BASIS OF EVI DENCE AVAILABLE ON RECORD AND REASON TO BELIEVE WAS FOLLOWED BY THE A.O. ON THE S PECIFIC INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. THE SAID INFORMATION WAS NOT GENERAL OR VAGUE, I.E. PERTAINING TO THE TRANSACTIO NS MADE BY THE ASSESSEE. THEREFORE THE A.O. HAS RECORDED THE REASONS ON THE BASIS OF SUFFICIENT EVIDENCE AVAILABLE ON RECORD. HE REQUESTED HAT THE ISSUE R AISED BY THE ASSESSEE IN GROUND NO.1 MAY BE DISMISSED BY UPHOLDING THE ORDER PASSED BY A.O. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT THE A. O. HAS RECORDED THE REASONS WHICH HAD VERY MUCH LINKED WITH THE MATERIAL IN POS SESSION OF THE A.O. AND THE ASSESSEE HAS NOT POINTED OUT ANY INFIRMITY IN THE R EASONS RECODED BY THE A.O. BEFORE REOPENING OF ASSESSMENT U/S 147 OF THE ACT. AFTER PERUSING THE ORDERS PASSED BY REVENUE AUTHORITIES, SPECIFIC INFORMATION FROM IT (INV.) REGARDING BOGUS ACCOMMODATION ENTRY WORTH RS.20,.03,000/-, TH E NOTICE WAS ISSUED BY THE A.O. TO THE ASSESSEE. SECONDLY, THE A.O. AFTER RECE IVING NECESSARY APPROVAL FROM THE COMPETENT AUTHORITIES HAS ISSUED NOTICE U/ S 148 TO THE ASSESSEE AND ALSO PROVIDED OPPORTUNITY TO THE ASSESSEE TO RAISE OBJEC TION AND FILE THE REPLY IF ANY. THE A.O. HAS ALSO RECORDED VALID REASONS ON THE BAS IS OF EVIDENCE AVAILABLE WITH PAGE 5 OF 8 I.T.A.NO. 800/DEL/2012 HIM AND REOPENING OF THE ASSESSMENT IN THE CASE OF THE ASSESSEE AND HE HAS ALSO PROVIDED REASONS RECORDED TO THE ASSESSEE AGAINST W HICH THE ASSESSEE HAS RAISED OBJECTION AND THE SAME WAS ELABORATELY DISCUSSED AN D DECIDED BY PASSING SPEAKING ORDER BY THE A.O. IN VIEW OF THE FACTS A ND CIRCUMSTANCES, OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE A.O. HAS ISS UED VALID NOTICE U/S 148 OF THE I. T. ACT, 1961 ON THE BASIS OF MATERIAL AVAILA BLE WITH HIM AND AFTER PRESCRIBED PROCEDURE UNDER LAW, THEREFORE THE ISSUE RAISED IN GROUND NO.1 IS DECIDED AGAINST THE ASSESSEE AND THE SAME IS DISMIS SED. 11. AS REGARD GROUND NO.2 WHICH IS REGARDING ADDITI ON OF RS.20,03,000/- MADE BY THE A.O. U/S 143(3) OF THE ACT ON THE BASIS OF SPECIFIC INFORMATION RECEIVED BY AO FROM THE DIT (INV.) THAT POLO LEASIN G AND FINANCE PVT. LTD. IS INTO THE BUSINESS OF GIVING ACCOMMODATION ENTRIES A ND THE SAID INFORMATION HAS BEEN CO-RELATED WITH THAT OF THE UNCONTROVERTED FAC TS AND CIRCUMSTANCES, THE AO HAD REASON TO BELIEVE THAT THE TRANSACTION OF RS.20 ,03,000/- ON THE BASIS OF AGREEMENT TO SELL IS A SHAM TRANSACTION. IN VIEW O F THE ABOVE FACTS, LD. CIT(A) UPHELD THE ADDITION MADE BY A.O. AFTER HEARING BOT H THE PARTIES AND PERUSING THE MATERIAL ON RECORD AND AFTER PERUSING THE ORDER S OF AUTHORITIES BELOW AS WELL AS THE CASE LAW CITED BY THE PARTIES, WE OBSERVED T HAT THE ASSESSEE HAS FAILED TO SHOW IF HE HAS MADE ANY EFFORT TO COMPLY WITH THE C LAUSE 4 OF THE AGREEMENT TO SELL IN QUESTION TO TAKE NECESSARY PERMISSION FROM THE HIMACHAL PRADESH GOVERNMENT TO SELL PROPERTY IN QUESTION TO POLO LEA SING AND FINANCE PVT. LTD. BEING A NON HIMACHALI OR A CORPORATE BODY. WITHOUT NECESSARY PERMISSION A NON-HIMACHALI OR A CORPORATE BODY CANNOT PURCHASE P ROPERTY IN HIMACHAL PRADESH. SO THIS FACT GOES TO PROVE THAT THE ENTIRE TRANSACTION QUA AGREEMENT TO SELL IN QUESTION WAS A BOGUS AND FRIVOLOUS ONE TO P ROVIDE CREDIT ENTRY TO THE ASSESSEE. THE DETAILS OF ACCOMMODATION ENTRY RECEI VED ARE NOTED AS UNDER: PAGE 6 OF 8 I.T.A.NO. 800/DEL/2012 BENIFICIA RY BANK NAME BENFICIA RY BANK BRANCH VALUE OF ENTRY TAKEN INSTRUMENT NO. BY WHICH ENTRY TAKEN DATE ON WHICH ENTRY TAKEN NAME OF ACCOUN T HOLDER OF ENTRY GIVING ACCOUN T BANK FROM WHICH ENTRY GIVEN BRANC H OF ENTRY GIVING BANK A/ C N O ENTRY GIVING ACCOUN T CBI GREATER KAI LASH- 11 2003000 16691 10-JAN- 03 POLO LEASING & FINANCE P. LTD. PATNAKA R KAROL BAGH 169 2003000 12. LOOKING INTO THE ABOVE FACTS, WE OBSERVED THAT THERE IS NOT AN IOTA EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE DURING T HE PROCEEDING BEFORE AO IF ANY COMMUNICATION HAS BEEN INITIATED BY IT WITH HIM ACHAL GOVT. FOR SALE AND PURCHASE OF THE PROPERTY IN QUESTION SITUATED IN HI MACHAL PRADESH. A BARE PERUSAL OF THE COMMUNICATION BETWEEN THE ASSESSEE A ND M/S POLO LEASING AND FINANCE PVT. LTD GOES TO PROVE THAT NONE OF THEM HA D ANY INTENTION TO SELL OR PURCHASE THE PROPERTY IN QUESTION. IT IS FURTHER OB SERVED THAT THE CONDUCT OF M/S POLO LEASING AND FINANCE IN NOT CONFRONTING THE ASS ESSEE AFTER RECEIPT OF NOTICE DATED 30.07.2004 THAT SINCE IT HAS NOT COMPLIED WIT H CLAUSE 4 OF THE AGREEMENT TO SELL IN QUESTION. IT (ASSESSEE) HAS NO RIGHT TO FORFEIT THE EARNEST MONEY OF RS.20 LACS. FACTUM OF NON CHALLENGING THE LOCUS OF THE ASSESSEE TO FORFEIT THE EARNEST MONEY OF RS.20 LACS BY POLO LEASING AND FIN ANCE PVT. LTD GOES TO PROVE THAT BOTH THE PARTIES HAVE ENTERED INTO AGREEMENT T O SELL IN QUESTION JUST TO PROVIDE ACCOMMODATION ENTRY. SO THE AGREEMENT TO SE LL IN QUESTION IS A SHAM TRANSACTION AND INGENUINE DOCUMENT. IT IS FURTHER NOTED THAT THE ASSESSEE AFTER ISSUING THE NOTICE DATED 30.07.2004 ASKING M/S. POL O LEASING & FINANCE PVT. LTD. TO GET THE SALE DEED EXECUTED BEFORE THE DATE FIXED, FAILING WHICH EARNEST MONEY OF RS.20 LACS SHALL BE FORFEITED, HAS NEVER I NTIMATED M/S POLO LEASING & FINANCE PVT. LTD THAT ITS EARNEST MONEY OF RS. 20 LACS STOOD FORFEITED. IT IS ALSO NOTED THAT SINCE THE ASSESSEE HAS NEVER RESCINDED T HE AGREEMENT DATED 10.01.2003 THE QUESTION OF FORFEITING THE EARNEST M ONEY OF RS.20 LACS, PAGE 7 OF 8 I.T.A.NO. 800/DEL/2012 ADMITTEDLY RECEIVED FROM M/S. POLO LEASING AND FINA NCE PVT. LTD, DOES NOT ARISE AND IN SUCH EVENTUALITIES M/S. POLO LEASING FINANCE COMPANY HAD THE RIGHT TO SEEK REFUND WITHIN THREE YEAR COMMENCING FROM 10 TH APRIL 2004. IT IS FURTHER OBSERVED THAT IN THE GIVEN CIRCUMSTANCES THE JUDGEM ENT OF THE TRIBUNAL IN THE CASE OF DURABLE PROPERTY PVT. LTD. (SUPRA) AS RELIE D UPON BY THE ASSESSEE IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE BECAUSE THE AGREEMENT OF SALE IN QUESTION IS PROVED TO BE A SHA M TRANSACTION HAVING BEEN PREPARED TO PROVIDE ACCOMMODATION ENTRY AND AS SUCH , THE QUESTION OF PROVIDING PROTECTION TO THE SAME U/S 51 OF THE INCOME TAX ACT DOES NOT ARISE. 13. IN VIEW OF ABOVE, WE AFFIRM THE ORDER OF LD. CI T(A) AND DISMISS GROUND NO.2 OF THE ASSESSEES APPEAL. 14. GROUND NO.3 OF ASSESSEES APPEAL IS CONSEQUENT IAL AND NEED NO ADJUDICATION AT THIS POINT OF TIME. 15. IN THE RESULT, APPEAL OF ASSESSEE STANDS DISMIS SED. 16. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUG., 2015. SD./- SD./- (R. S. SYAL) (H. S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 14 TH AUG., 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY: BY ORDER (ITAT, NEW DELHI) PAGE 8 OF 8 I.T.A.NO. 800/DEL/2012 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 10/8 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 11 ,12 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 14/8/15 SR. PS/P S 6 KEPT FOR PRONOUNCEMENT 1 4 / 8 SR. PS/PS 7 FILE SENT TO BENCH CLERK 1 4 / 8 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER